Far Cash Flow

Front 1

Operating activities (1)

Back 1

Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.
Under IAS 7, operating cash flows include: Receipts from the sale of goods or services
Receipts for the sale of loans, debt or equity instruments in a trading portfolio.
INTEREST RECEIVED ON LOANS
Payments to suppliers for goods and services.
Payments to employees or on behalf of employees
INTEREST PAYMENTS (alternatively, this can be reported under financing activities in IAS 7, and US GAAP)
buying Merchandise
Items which are added back to [or subtracted from, as appropriate] the net income figure (which is found on the Income Statement) to arrive at cash flows from operations generally include:
Depreciation (loss of tangible asset value over time)
Deferred tax
Amortization (loss of intangible asset value over time)

Front 2

Operating Activities (2)

Back 2

Any gains or losses associated with the sale of a non-current asset, because associated cash flows do not belong in the operating section.(unrealized gains/losses are also added back from the income statement)

Front 3

Investing activities (1)

Back 3

Examples of Investing activities are
Purchase or Sale of an asset (assets can be land, building, equipment, marketable securities, etc.)
Loans made to suppliers or received from customers
Payments related to mergers and acquisitions.

Front 4

Financing activities (1)

Back 4

Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement.
Under IAS 7,
Proceeds from issuing short-term or long-term debt
PAYMENT OF DIVIDENDS
Payments for REPURCHASE of company shares (TREASURY STOCK)
Repayment of debt principal, including capital leases
For non-profit organizations, receipts of donor-restricted cash that is limited to long-term purposes
Items under the financing activities section include:
DIVIDENDS PAID
SALE or REPURCHASE of the company's stock (TREASURY STOCK)
Net borrowings
Payment of dividend tax

Front 5

When a firm LENDS money to other parties and collects the principal on loans, what part of cash flow is that, Financing or Investing?

Back 5

It is acting as an INVESTOR. Such flows are investing cash inflows and outflows

Front 6

When the firm BORROWS money and pays it back, the corresponding flows are Financing or Investing?

Back 6

Financing Cash Flows

Front 7

Interest Received

Back 7

Investing Cash Flows. The common practice for interest and dividends received is to disclose them under investing activities heading of statement of cash flows.

Front 8

Dividends Received

Back 8

Investing Cash Flows. The common practice for interest and dividends received is to disclose them under investing activities heading of statement of cash flows.

Front 9

Dividends Paid

Back 9

Financing Cash Flows
Debit Dividends Payable
Credit Cash Common practice is that any dividends paid irrespective of type of shares are disclosed under financing activities.

Front 10

Interest Payments

Back 10

OPERATING and Financing Cash Flows (IFRS & GAAP) Common practice is that interest paid is treated under the heading of operating activities.

Front 11

Dividends Declared

Back 11

No impact to cash flows.
Debit Retained Earnings
Credit Dividends Payable

Front 12

When treasury stock is acquired or sold it is reported as a cash out/inflow in the

Back 12

Financing section of the Cash Flow Statement.

Front 13

Operating Activities (3)

Back 13

Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include:[11]
Receipts from the sale of goods or services
Receipts for the sale of loans, debt or equity instruments in a trading portfolio
Interest received on loans
Payments to suppliers for goods and services.
Payments to employees or on behalf of employees
Interest payments (alternatively, this can be reported under financing activities in IAS 7, and US GAAP)
buying Merchandise

Items which are added back to [or subtracted from, as appropriate] the net income figure (which is found on the Income Statement) to arrive at cash flows from operations generally include:
Depreciation (loss of tangible asset value over time)
Deferred tax
Amortization (loss of intangible asset value over time)
Any gains or losses

Front 14

Investing Activities (2)

Back 14

Examples of Investing activities are
Purchase or Sale of an asset (assets can be land, building, equipment, marketable securities, etc.)
Loans made to suppliers or received from customers
Payments related to mergers and acquisitions.

Front 15

Financing Activities (2)

Back 15

Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement.

Under IAS 7,
Proceeds from issuing short-term or long-term debt
Payments of dividends
Payments for repurchase of company shares
Repayment of debt principal, including capital leases
For non-profit organizations, receipts of donor-restricted cash that is limited to long-term purposes

Items under the financing activities section include:
Dividends paid
Sale or repurchase of the company's stock
Net borrowings
Payment of dividend tax

Front 16

Disclosure of non-cash activities

Back 16

Under IAS 7, non-cash investing and financing activities are disclosed in footnotes to the financial statements. Under US General Accepted Accounting Principles (GAAP), non-cash activities may be disclosed in a footnote or within the cash flow statement itself. Non-cash financing activities may include[11]
Leasing to purchase an asset
Converting debt to equity
Exchanging non-cash assets or liabilities for other non-cash assets or liabilities
Issuing shares in exchange for assets

Front 17

Preparation methods of the Cash Flow Statement

Back 17

The direct method of preparing a cash flow statement results in a more easily understood report.[12] The indirect method is almost universally used, because FAS 95 requires a supplementary report similar to the indirect method if a company chooses to use the direct method.